Duolingo Plunges 6.15% to April 2025 Low on Jefferies Price Cut

Duolingo's stock price fell to its lowest level since April 2025 today, with an intraday decline of 6.15%.

The strategy of buying Duol shares after they reached a recent low and selling after holding for one week delivered strong returns over the past five years. The strategy achieved a 440.09% return, vastly outperforming the benchmark return of 58.03%. The excess return was 382.06%, indicating the strategy's ability to capitalize on price movements. With a CAGR of 95.50% and a maximum drawdown of 0.00%, the strategy also showcased robust risk-adjusted returns and minimal downside risk.

Jefferies recently reduced its target price for Duolingo from $500 to $400, which likely contributed to investor sentiment and a decrease in stock value. This adjustment by Jefferies reflects a more cautious outlook on the company's future performance, potentially leading investors to reassess their positions.

Analysis and forecasts suggest that Duolingo's stock is trading 4.52% below forecasts, indicating potential overvaluation and a bad time for purchase. This discrepancy between the current stock price and analyst forecasts may deter investors from buying, further contributing to the stock's decline.

Duolingo's score of 40 is 20% below its historic median score of 50, inferring higher risk. This lower score may signal to investors that the company is facing increased challenges or uncertainties, making them more hesitant to invest in the stock. This perception of higher risk can lead to a sell-off, driving the stock price down.